A lot of green across the portfolio this month. La Serena is moving fast, The Avenues is raising rents, and StoneRidge just hit a milestone worth celebrating. Here is the full update.
The national median rent reached $1,388 in July, up 0.2% month-over-month for the sixth consecutive monthly increase, though still down 1.1% year-over-year after bottoming at -1.6% in April. The national vacancy rate holds at 7.2%, declining for the first time since late 2021.
On the supply side, deliveries fell 27% year-over-year in Q2, and units under construction, at 3.5% of existing inventory, are at their lowest level since 2013. That's good news for us, because less supply, means higher rents and higher occupancy! With starts still muted, new supply entering the market is set to decline through 2027, extending the runway for occupancy gains. That structural setup rewards patient, asset-level operators.
The FOMC voted 9-3 on July 29 to, once again, hold the federal funds rate at 3.50%-3.75%. Some strategists do not expect a hike this year, but broadly agree that if inflation stays above 2%, the Fed will keep rates higher for longer. For real estate borrowers, the message has not changed: NOI growth is the primary lever, and financing tailwinds are not coming soon.
The Avenues continues to exceed expectations. The team just executed two new 2-bedroom leases at $1,400 per month, up from the previous rate of $1,250, with more rent increases anticipated through the summer. The property is performing ahead of schedule!
The team is actively underwriting both refinance and sale options for a potential year-end exit, and is currently leaning toward a sale. A disposition would return investor capital and position the partnership for new acquisitions. No final decision has been made, and investors will receive updates as the analysis progresses.
Exterior renovations, new signage, and upgraded lighting on a property are not just cosmetic. They are retention and leasing tools. When residents see visible progress, they renew. When prospective tenants pull up to a property with fresh paint, modern lighting, and clear signage, they qualify themselves faster and at higher rents. The fastest way to compress vacancy is to make the property feel like ownership has changed, because it has.
The math compounds quickly. A stronger tenant base means lower turnover, lower turnover means lower unit-prep costs and less lost rent, and lower costs flow directly to NOI. At a 6% cap rate, every $1,000 of annual NOI improvement adds roughly $16,700 of property value. Parking lot repairs, a new monument sign, and LED lighting may feel like operational details. They are also a direct investment in the exit valuation.
La Serena is executing on all fronts. All lender-required 60-day repairs are complete, and the 90-day and 12-month repair items are nearly finished, both ahead of schedule. Welding crews have addressed stair, balcony, and railing safety across the property. Painters are priming and coating all metal surfaces while simultaneously repairing wood rot, siding, trim, and exterior damage in preparation for a full exterior paint. Building 1 painting has already begun. New building signage for the entire property with an all new look and La Serena Logo is ready to go.
Every unit has been retrofitted with water saving devices including new low flow toilets for significant water cost savings. New LED monument signage has been ordered for the front of the property, and a professional lighting company is installing new LED fixtures across all common areas, walkways, parking lots, and building exteriors. Professional arborists have removed trees that threatened foundations and roofs and trimmed the rest. The high speed internet and 24-camera Vivint security system are fully operational. Three contractor crews are now working simultaneously on 2-bedroom unit upgrades, with a target of approximately 10 units completed this month.
Asphalt and concrete contractors are actively bidding the parking lot, which has significant pothole and cracking work ahead. A back-to-school resident event is also in the works. The pace at La Serena is exactly what a value-add business plan should look like.
With StoneRidge at 100%, La Serena hitting lender milestones ahead of schedule, and The Avenues pushing rents higher and sending distributions, the portfolio is in strong shape heading into fall. The team will be back on-site at La Serena within the next two weeks to keep the momentum going. If you have questions about any of the properties or want to talk through what is in the pipeline, reach out anytime.
Questions about the portfolio or want to connect? Reach out to the EagleCap team directly.
